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USDOLLAR Support in Focus as Fed Says June Hike ‘Unlikely’

USDOLLAR Support in Focus as Fed Says June Hike ‘Unlikely’

David Song,

Talking Points:

- USDOLLAR Advance Fizzles as FOMC Minutes Talk Down June Rate-Hike.

- USD/JPY Climbs to Fresh Monthly High Ahead of Bank of Japan (BoJ) Policy Meeting.

- GBP/USD Clings to Bullish Trendline on Upbeat Bank of England (BoE) Minutes.

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USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index11813.3211850.3211804.740.0264.13%
USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Dow Jones-FXCM U.S. Dollar spikes into a fresh monthly/weekly high of 11,850 as the Federal Open Market Committee (FOMC) Minutes highlight all options remain on the table, but point to a narrowing scope for a June rate hike, with a few member showing concerns regarding the slowdown in the first-quarter.
  • Even though the Fed remains on its way to remove the zero-interest rate policy (ZIRP), the dollar remains at risk of face headwinds ahead of the next rate announcement on June 17 should the fundamental developments continue to fall short of market expectations.
  • Lack of momentum to close above the Fibonacci overlap around 11,826 (61.8% expansion) to 11.843 (38.2% retracement) may ultimately lead to range-bound prices going into the end of the week.

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USD/JPY Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • USD/JPY looks poised for a further advances as it breaks out of the triangle/wedge formation this week along with the ongoing series of higher highs & lows in price; close above 121.20 (78.6% retracement) raises the risk for a run at the 2015 high (122.01).
  • Japan’s better-than-expected 1Q Gross Domestic Product (GDP) report may encourage the Bank of Japan (BoJ) to endorse a wait-and-see approach as Governor Haruhiko Kuroda remains confident in achieving the 2% target for inflation.
  • Even thought the DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long USD/JPY since April 8, ratio continues to narrow as it currently sits at +1.08.


GBP/USD Daily Chart
  • Despite the near-term pullback in GBP/USD, the pair may continue to retrace the decline from 2014 as long as price & the Relative Strength (RSI) retain the bullish structures.
  • Seems as though it remains a close rate between the Bank of England (BoE) and Fed for higher rates as the central bank remains confident in achieving the 2% target for inflation over the policy horizon & sees spare capacity being fully absorbed over the next 12-months.
  • Break/close back above 1.5550 (61.8% expansion) to 1.5570 (38.2% retracement) may open up the door for another run at the 1.5800 handle.

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Read More:

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EURCAD Pullback Stalls at Support- Sub 1.3538 to Negate Bullish Bias

--- Written by David Song, Currency Analyst

To contact David, e-mail Follow me on Twitter at @DavidJSong.

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